Geir and Steingrímur Testifed in Court Skip to content

Geir and Steingrímur Testifed in Court

So far, 40 witnesses have appeared before the court to testify and Geir was the last one to give his statement. The conclusion of the court case has been delayed until 1 pm on Thursday March 15.

In his statement Geir said he was under the impression the CEOs of the Icelandic banks had done everything to prevent the financial crisis, reports.

Former PM Geir H. Haarde and Prosecutor Sigríður J. Friðjónsdóttir.

The state prosecutor, Sigríður J. Friðjónsdóttir, asked Geir what the government’s view of the circumstances was as they presented themselves in the fall of 2008.

“We were certain that both the heads of the banking system and members of staff would do whatever it took to prevent the banks from collapsing. No one believed otherwise,” he replied.

He also claimed the government had discussed the situation with bankers and ways to reduce the risk.

On Monday former CEO of Landsbanki, Halldór J. Kristjánsson, who gave his testimony via phone, referred to meetings with the former prime minister.

“We did all we could to influence the situation,” Geir said in his testimony, referring to meetings that with the heads of the banks at the time.

As reported by both Channel 2 and Rúv evening news last Monday, the phone connection with Canada from where Halldór testified was very poor.

Steingrímur J. Sigfússon, the Minister of Economic Affairs and former Minister of Finance, also testified yesterday. In his testimony, he criticized the media, politicians and other institutions for ignoring the cautionary words of individuals who warned of signs of danger in the financial system at the time.

Steingrímur J. Sigfússon-Minister of Economic Affairs. Photo by Páll Kristjánsson.

He also testified that at the time it was common belief that “Iceland was the best in the world” and there was no need to heed to caution.

Already in 2005, Steingrímur was among members in the Left-Green party, at present a ruling party but at the time a member of the opposition, who encouraged actions to ensure economical stability in a bill available in Icelandic here.

A clause in the bill stated:

“It is necessary for the Financial Supervisory Authority (FME) to conduct a careful risk assessment of the possible effects of a sudden devaluation of currency or lowering of property prices. The goal is to see that the fast growth of loans in recent times will not pose as a risk for the economy and that an evaluation of the net worth limitation and risk base of financial institutions.”

Steingrímur admitted that he had been surprised by the collapse of all three banks. He had expected that one or two of the Icelandic banks were struggling but not that all three would collapse.

Steingrímur also elaborated on conversations he had with representatives of the Nordic central banks after the minority government took charge following the resignation of Geir H.Haarde’s government coalition in late January 2009.

The Left-Green party took the place of the Independence party (Sjálfstæðisflokkur) with the support the Progressive party (Framsóknarflokkur) on February 1, 2009, when the Left-Greens formed a temporary coalition government with the Social Democratic party (Samfylking,) intended to rule until the 2009 spring election.

In the spring election, the Left Greens won the majority vote and continued to work with the Social Democratic party in a coalition government.

In the talks between Steingrímur and the representatives from the Nordic central banks, he sensed a reduced level of confidence in Icelanders, reports.

“More than once did it become evident in the communications that the trust in the Icelandic government was shattered and it would become necessary to regain it,” Steingrímur said and continued:

“In their eyes, they were doing us a favor,” Steingrímur said when asked about the collaboration between the Nordic countries and Iceland in currency affairs.

He concluded by saying that he had traveled overseas on a regular basis to guarantee the best terms and conditions available in loan agreements.

The trial continues on Thursday.


Click here to see photos from the Landsdómur Trial over Geir H. Haarde.

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